Young, Dynamic and Technologically AdvancedWed, 01/25/2012 - 11:10
Q: Why did you decide to create FCM at such a young age, and how was the partnership with Kimray established?
A: After graduating from university in 2008, and going a long way through the interviewing process with Schlumberger, I realized that I was better suited to entrepreneurship and decided to start my own business. At the time, I had little knowledge of the oil and gas industry but understood that it offered very interesting business opportunities. To familiarize myself with this industry, I worked with Valerus Compression Systems for four months. After this period, my business partner had the opportunity to become the exclusive Mexican distributor for Kimray, a process equipment manufacturer from Oklahoma City. We offered to create a specialized company with a strong focus on marketing their technology here in Mexico. This was very interesting for Kimray, because most other potential distributors in the Mexican market were service companies that simply used Kimray products. In January 2009, FCM was created as a vehicle for Kimray products.
Q: Which business culture did you try to create, and why did your current employees believe in the company in the early days?
A: The philosophy that I wanted to bring to my business was teamwork. After extensive talks with Kimray executives on how best to design the business, we finally initiated a policy of hiring recent graduates with little experience in the industry. We chose to start with a blank slate, which ruled out bringing in older salespeople who might not have been willing to share existing clients, but could have brought bad habits with them. Generally, the attributes that we were looking for were energetic people who were self-motivated and responsible, and had a positive attitude about learning new things. At the early stages, as a completely new company with no experience or contacts, we could not promise much to our employees. In the first year of operation, we lost money, but by the end of that year we had identified three key market segments and three areas where Pemex E&P had installed Kimray products. By year two, we knew we would have three service contracts for those products. We put a serious amount of effort into promoting the company and building our contact book, and by 2010 we saw that this work was starting to pay off. Our sales grew nine-fold between 2009 and 2010, and the red numbers became black.
Q: How did you overcome the challenge of selling new technology to the older generation of engineers and managers while being a young company run by recent graduates?
A: We still haven’t found the key to that yet. It’s different for every customer. Every user likes things to be done in a certain way and it’s more about experience. If you go to a privately-held company and you show them high quality products based on superior technology at competitive prices, with excellent lead times and free trials, it is very easy to convince them to try your products. After the trial, if everything goes well, they purchase your equipment and they start doing business with you because they want to save money. Following this logic, we thought that everything would move quickly with Pemex. But Pemex has a law that prevents employees from taking fast decisions, or decisions based on personal opinions. Even though they liked our product during free tests, in the end the product had to be purchased through the contractor that Pemex had chosen for each project. This doubled the amount of work: we had to convince the end-user Pemex to request our product from their contractors, and we had to convince the contractors to work with us as well.
During the first year, none of our sales were to Pemex. However, after 2009, we learned a little bit more about the Mexican market. At the start of 2010, we knew that contracts for spare parts would be assigned directly, and we started to know more people in Pemex as well as the private sector. Today, Kimray remains our main focus, the backbone for our marketing, but since we saw the opportunity to start handling more products, we have started adding tubing, connections, bowl valves, pressure-relief valves and safety valves to our product portfolio.
Q: What summarizes your business strategy today?
A: Our strategy is very aggressive and very Mexican. I mention it because we try our best to support Pemex to increase production. In our line of business, there is not just one right solution. A solution that works is a great solution. When dierent products can be used to solve the same issue, we always oer the cheapest solution that works.
FCM is not here for the short term; our objective is not to make a couple of big sales with a large profit margin and then get out of the oil and gas business and retire. We’re here for the long run and we take the image our customers have of FCM very seriously. We want to be known as a company that offers quality products at very competitive prices and that is accompanied by excellent service. That is our business model.
Sometimes our customers want us to sell them what they have in mind. If that is not the right solution for the process and the product fails, the customer is going to blame you and your product. While it is tough to go against your customer’s ideas, sometimes you need to in order to deliver an optimal solution, and what they had in mind is often more expensive than what we are offering. We really want our customers and Pemex to consider us as partners.
Q: What should the company look like after 10 years of operation?
A: Since we are very ambitious and aggressive, we want to grow as fast as we can. We are still a very small company that aims to double its sales year-on-year. We think that the oil and gas industry is going to keep on growing for at least 20 more years. We have to make sure to never think that we are the best company out there and become complacent. We need to stay hungry and always improve our value proposition.
Maybe I’m dreaming too much, but after 10 years I would like to think that we will be a national company providing multiple services. We wish to be, as soon as possible, a company that is able to participate in the integrated service contracts. We want to be an operator of onshore fields. We have the capabilities and capital to do this in less than two years, in cooperation with an experienced partner that can take care of the exploration and drilling activities. We can take care of everything else. I am sure that we will do a very good job, since we are good at finding opportunities for optimization. This idea is very motivating for us, because it would enable us to become a small Pemex, but more effcient. This concept sounds very promising, but is it not an offcial goal of the company yet because we still need to grow more beforehand.
This year, we are still focused on the onshore market, not only in Chicontepec but also in Poza Rica, Reynosa and the southern region. The important thing is getting into the market. It is very hard to lose customers if you offer a very good product at a very good price. We are also looking forward to get into offshore vessels as a separate line of business. Actually, we already own two companies that were especially created for this purpose and have the required permits to work offshore. We just need to purchase a vessel and put it to work. In a couple of years, we will be in the shipping industry.
Our business strategy is different from what normal Mexican companies do; we keep investing in the company and are not taking money out. My goal really is to grow the company as much as possible. I will consider the company to be truly successful once we reach a US$100 million in annual sales. We are still far from reaching this objective, but we expect to reach that point in five to seven years. If we get there in less time, that would be astonishing. I would be very impressed.